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DATE: |
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TO: |
Office of Commission Clerk (Cole) |
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FROM: |
Division of Economic Regulation (Sickel, Draper) Office of the General Counsel (Fleming) |
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RE: |
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AGENDA: |
08/28/07 – Regular Agenda – Tariff Filing – Interested Persons May Participate |
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COMMISSIONERS ASSIGNED: |
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PREHEARING OFFICER: |
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SPECIAL INSTRUCTIONS: |
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FILE NAME AND LOCATION: |
S:\PSC\ECR\WP\070056.RCM.DOC |
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By Order No. PSC-05-0181-PAA-EG, issued on February 16, 2005, in Docket No. 040033-EG, In re: Petition for numeric conservation goals by Tampa Electric Company, the Commission approved the Price Responsive Load Management Pilot Program. The projections and estimates were based on a projected program period of 24 months from the effective date of the tariff, so that the program was set to expire on February 1, 2007.
On January 17, 2007, TECO filed a petition for extension of the pilot program in order to analyze data from the winter of 2006-2007. That petition opened this docket, and by Order No. PSC-07-0151-PAA-EG, issued February 21, 2007, the Commission granted an extension that would end no later than August 31, 2007. This recommendation addresses the petition filed by TECO on June 4, 2007, requesting that the pilot program be converted to permanent status.
The Commission has jurisdiction over this matter pursuant to sections 366.06, 366.80 through 366.82, Florida Statutes.
Issue 1:
Should Tampa Electric Company's (TECO) petition to convert its Pilot Residential Price Response Load Management Program to a permanent program be approved?
Recommendation:
Yes. The pilot program demonstrated that the Price Response Load Management Program is monitorable and cost effective. The energy savings and demand reductions of the permanent program will contribute toward meeting or exceeding the numeric conservation goals approved for TECO. Staff also recommends that TECO be allowed to request recovery of costs of the permanent program through the Energy Conservation Cost Recovery (ECCR) clause. (Sickel, Draper)
Staff Analysis:
The conservation pilot program was approved by Order No. PSC-05-0181-PAA-EG as part of TECO's conservation planning for the period of 2005-2014. The pilot program was authorized based on projections and analysis indicating that it would meet the three criteria required:
· The program would be directly monitorable and yield measurable results;
· The program would be cost effective; and
· The program would advance the policy objectives of Rule 25-17.001, Florida Administrative Code, and sections 366.80 through 366.85, Florida Statutes, also known as the "Florida Energy Efficiency and Conservation Act" (FEECA).
The program had been anticipated to run for a period of 24 months, but the time required for start-up and an extraordinarily mild winter in 2005-2006 meant that TECO was unable to gather and analyze the needed winter season data. The company petitioned for an extension so that data from the winter 2006-2007 period could be included in the analysis of the pilot program results. In Order No. PSC 07-0151-PAA-EG, the Commission granted an extension until August 31, 2007. TECO filed a petition on June 4, 2007, with information in support of the request for conversion of the pilot program to permanent status.
Customers who choose to participate in the program take service under TECO's RSVP-1 tariff. The RSVP-1 tariff provides a multi-tiered rate structure that is designed to work as a price signal and alert participating customers to reduce load and energy consumption during high-cost periods. Under the program, TECO installs communication equipment and a "smart" thermostat in the residence of each participant. The customer is then able to control the operation of selected appliances such as space heating, air conditioning, water heating and pool pumps in response to price signals from the utility. The customer can turn on or turn off the equipment automatically or manually, or reset the thermostat in response to price signals received. Under TECO’s current pilot program, participating customers pay a non-fuel energy charge that varies in the four pricing periods. The pricing periods were established in the pilot program, and TECO is not proposing to change them.
Since the RSVP-1 program is a conservation program, TECO proposes to structure the pricing scheme for the permanent program to reflect the price variations in the Energy Conservation Cost Recovery (ECCR) factor. The non-fuel base rate will remain constant with the ECCR factor varying by pricing periods. Therefore, customers taking service under the RSVP-1 rate will pay the otherwise applicable base rate energy charge (4.342 c/kWh) for all pricing periods. The table below shows the current energy charges and the proposed conservation charges for each pricing period.
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Pricing Periods |
Current Energy Charge |
Proposed Conservation Factors |
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Low Cost Hours (P1) |
2.217 c/kWh |
(3.441) c/kWh |
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Medium Cost Hours (P2) |
3.751 c/kWh |
(0.844) c/kWh |
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High Cost Hours (P3) |
9.436 c/kWh |
7.559 c/kWh |
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Critical Cost Hours (P4) |
35.395 c/kWh |
41.782 c/kWh |
The proposed conservation factors would be in effect from the approval date of this tariff until December 31, 2007. The conservation factors for the RSVP-1 tariff will change annually and will be established during the cost recovery hearings of each year prior to their effective date in the following January. TECO states that documentation supporting the proposed conservation factors for the next year will be a component of TECO’s annual energy conservation cost recovery projection filing.
TECO states that the impact of the proposed RSVP-1 program on the total revenues collected in the conservation clause will be minimal. If customers who participate in the program do not change their consumption behavior, there will be no impact on revenues in the conservation clause. If customers reduce their energy consumption, there will be a minimal reduction in conservation revenues. That reduction will be captured in the true-up for the following years’ conservation factors.
Customers who participated in the pilot program used an average of 1,469 kWh per month. Under TECO’s proposed RSVP-1 rate, a customer having the average consumption would pay the same under the standard residential rate and under the RSVP-1 rate ($151.57). In other words, a customer who does not reduce the energy consumption in response to the price signal does not benefit from being on the RSVP-1 rate. The proposed tariff sheets for the RSVP-1 rate are included as Attachment 1.
The price-responsive program differs from previous conservation programs in critical ways. In the case of previous load control programs, the utility would interrupt service to an appliance without the customer making a direct or specific decision. Under the pilot program, customers have been able to decide when and how to operate specific appliances in their homes. Based on an understanding that energy costs increase during periods of higher demand, customers can modify electric energy consumption to shift consumption from periods of higher demand and greater expense to periods of lower demand and less expense. Such a shift lowers the bill for that consumer and benefits TECO and other ratepayers as well.
TECO reports that the program was effective and well-received by consumers. Surveys indicate that more than 90% of the participants are pleased with the pilot program and will elect to continue participation if the program is made permanent. The survey work showed that 89% of participants liked having the ability to control home energy usage. They especially liked having the capability to pre-program the major energy consuming appliances in their home, and would recommend the program to friends and relatives.
TECO has compared the pilot group of customers with a control group to estimate summer and winter demand reductions and annual energy savings of 2.4 kW for summer, 3.1 kW for winter, and 1,071 kWh annual savings for individual participants. TECO proposes to begin marketing the program as soon as permanent infrastructure has been established. Projected annual addition of new participants is expected to level off at 1,500 by 2013 or soon thereafter, and, by year end 2014, TECO expects a total of 9,000 customers will be participating. Based on these predicted results, the program has an estimated benefit of $5.7 million, net present value.
The pilot program has demonstrated that the Price Responsive Load Management Program will be monitorable and cost effective and will provide energy savings unique to the program. TECO used the Commission-approved methods for determination of cost-effectiveness, and reports the resulting benefit-cost ratios as 1.40 for the rate impact measure (RIM) test and 2.48 for the total resource cost (TRC) test. The participants have zero cost, and benefits accruing to them have estimated net present value of $4.069 million. TECO anticipates that the permanent program will enable the company to capture energy savings and decrease peak demand, and thereby contribute to meeting or exceeding the conservation goals set for the company.
As part of the filing made in this docket, TECO included program standards, a projected analysis of participation and results, as well as tariff sheets. Staff recommends that the program should be approved, as it will benefit the general body of ratepayers, as well as participants. Staff also recommends that TECO be allowed to request recovery of costs of the permanent program through the Energy Conservation Cost Recovery (ECCR) clause.
Issue 2:
Should this docket be closed?
Recommendation:
Yes, if Issue 1 is approved, this tariff should become effective on August 28, 2007. If a protest is filed within 21 days of the issuance of the order, the tariff should remain in effect with any increase held subject to refund pending resolution of the protest. If no timely protest is filed, this docket should be closed upon the issuance of a consummating order. (Fleming)
Staff Analysis:
If Issue 1 is approved, this tariff should become effective on August 28, 2007. If a protest is filed within 21 days of the issuance of the order, the tariff should remain in effect with any increase held subject to refund pending resolution of the protest. If no timely protest is filed, this docket should be closed upon the issuance of a consummating order.